Tuesday, August 19, 2014
International Business Machines Corp. (IBM) cleared a U.S. national-security review for the sale of its low-end server business to China¡¯s Lenovo Group Ltd. (992), letting the $2.3 billion transaction go forward even amid tensions between the two nations.
The conclusion of the review by the Committee on Foreign Investment in the U.S., or Cfius, is ¡°good news for both IBM and Lenovo, and for our customers and employees,¡± Armonk, New York-based IBM said yesterday in a statement. While Cfius placed some conditions on the deal, they don¡¯t significantly affect the business, and terms of the transaction didn¡¯t change as result, a person with knowledge of the matter said, without specifying the conditions.
The sale drew scrutiny because of disputes between China and the U.S., the world¡¯s two largest economies, over cyberintrusions. By completing the deal, IBM can jettison a less profitable business to focus on growing areas, such as cloud computing and data analytics, while giving Lenovo a bigger piece of the global computing-hardware market.
¡°This is part of IBM¡¯s process moving away from hardware manufacturing to a more service-oriented product line and more profitable product lines,¡± Ivan Feinseth, chief investment officer at Tigress Financial Partners LLC, said in an interview. ¡°They are trying to change the direction they are going.¡± He has a neutral rating on IBM stock.
Spokesmen for IBM and Lenovo declined to comment on whether the Cfius clearance included any requirements or concessions. Holly Shulman, a spokeswoman for the Treasury Department, which leads Cfius, declined to comment.
By: DocMemory
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